8. Mr. KOPAC (Czechoslovakia) said that during the discussion in the First Committee, many delegations had shown themselves to be unhappy with the implications of article 1(1)(b) [became CISG article 1(1)(b) ]. The linking of the Convention on Contracts for the International Sale of Goods with the Prescription Convention would make article 1 [became CISG article 1 ] even more difficult to accept. The article was particularly important in that it defined the scope of the Contracts Convention. He would therefore ask for a separate vote on each of its paragraphs and on each of the subparagraphs of paragraph 1.
9. The Czechoslovak motion for division was rejected.
10. Article 1 [became CISG article 1 ] (A/CONF.97/11/Add.1, page 3) was adopted by 42 votes to none, with 1 abstention.
11. Mr. SAMI (Iraq) considered that the international oil trade was too important a matter to be covered by the Convention and that article 2 [became CISG article 2 ] should be amended by the addition of a new subparagraph, to read: "(g) of oil". If that amendment was not accepted, certain OPEC countries would not be able to accede to the Convention.
12. The PRESIDENT pointed out that UNCITRAL had examined the question of the oil trade in detail and had concluded that it was extremely difficult to regulate.
13. Mr. ROGNLIEN (Norway) asked the representative of Iraq whether his amendment was intended to deprive the buyer of the benefits of the Convention.
14. Mr. SAMI (Iraq) replied that the intention was quite the reverse. As the discussions had shown, his delegation was always anxious to establish a proper balance between the interests of the buyer and the seller. Oil, however, was not comparable with any other kind of goods; there were certain organizations that specialized in the formation of contracts for the sale of oil, which were drawn up on the basis of criteria not applicable to other goods; international oil sales, moreover, were subject to certain aspects of international relations. For all those reasons, oil should be excluded from the sphere of application of the Convention.
15. Mr. DABIN (Belgium) wondered whether, for the same reasons, natural gas should not also be excluded from the sphere of application of the Convention.
16. Mr. HERBER (Federal Republic of Germany) asked the representative of Iraq whether it was not enough for the oil trade to be governed by special rules, which would take precedence over the provisions of the Convention, the latter being in no way mandatory. Moreover, it would be difficult to exclude oil as such from the sphere of application of the Convention; as many debates in the Intergovernmental Maritime Consultative Organization (IMCO) had shown, it was extremely difficult to define that term precisely.
17. Mr. SAMI (Iraq) considered that it was just because contracts for the sale of oil were governed by special rules that it would be logical to exclude oil from the sphere of application of the Convention. Matters relating to the transport of oil and the definition of its quality could be dealt with under provisions other than those of the Convention, that whole area being an extremely complex one. If the Convention were to remain applicable to the sale of oil, the OPEC countries would thus require a lengthy period of reflection before they would be able to ratify it.
18. The Iraqi proposal for the addition of a new subparagraph (a) to article 2 [became CISG article 2 ] was rejected by 19 votes to 4, with 20 abstentions.
19. Mr. OSAH (Nigeria) said that although his country was a member of OPEC and an oil producer, it had abstained in the vote, believing that the matter should be left to OPEC to decide.
20. Mr. ZIEGEL (Canada) stressed that his vote should not be interpreted as a sign of hostility either to oil-exporting or to oil-importing countries. He believed that by virtue of article 5 [became CISG article 6 ] , the Convention was sufficiently flexible to meet everyone's needs. Each country would be free to exclude from its application any commodity it considered particularly important.
21. Article 2 [became CISG article 2 ] was adopted by 43 votes to none, with 2 abstentions.
22. Article 3 [became CISG article 3 ] was adopted by 45 votes to none.
23. Article 4 [became CISG article 4 ] was adopted by 45 votes to none.
24. Mr. ROGNLIEN (Norway) explained that the purpose of his amendment (A/CONF.97/L.1) was to bring the English text into line with the French version and with the corresponding provisions of the Prescription Convention. The expression "personal injury" would cover bodily and mental injury as well as pain and suffering "dommage moral", but not material damage.
25. Mr. KRISPIS (Greece) fully supported the amendment proposed by the representative of Norway.
26. The Norwegian amendment was adopted by 19votes to 5, with 22 abstentions.
27. Mr. PLANTARD (France) pointed out that the French text of document A/CONF.97/L.1 differed from the original, on which the Norwegian amendment was based, and which rightly used the phrase "lésions corporelles". For that reason, his delegation had preferred to abstain in the vote.
28. The PRESIDENT confirmed that the French text should read "lésions corporelles", and not "dommages corporels". After amendment the English text would be in line with the French.
29. Mr. MEDVEDEV (Union of Soviet Socialist Republics) explained that his delegation had abstained, as the Norwegian amendment did not apply to the Russian text.
30. Article 4 bis [became CISG article 5 ] , as amended by Norway, was adopted by 37 votes to none, with 5 abstentions.
31. Article 5 [became CISG article 6 ] was adopted by 42 votes to none, with 2 abstentions.
32. Mr. BONELL (Italy) reminded the Conference that his delegation had submitted a proposal to establish clearly that, although the parties would have every right to exclude the application of the Convention, they would have to say so explicitly. His delegation had none the less voted for the present wording of article 5 [became CISG article 6 ] on the understanding that if the parties were to opt for the national law of a Contracting State, that would not be considered as implicitly excluding the Convention.
33. Mr. MEHDI (Pakistan) felt that if article 5 [became CISG article 6 ] was taken in conjunction with article 7 [became CISG article 8 ], which set forth the subjective and objective criteria for interpreting the conduct of a party, it could lead to disputes over the exclusion of application of the Convention, derogation from its provisions, or the varying of its effects. It would have been better for article 5 [became CISG article 6 ] to stipulate that exclusion of the Convention must be expressly stated. For that reason, his delegation had abstained in the vote.
34. Mr. PLUNKETT (Ireland) and Mr. NICHOLAS (United Kingdom) both wished to make it clear that their votes in favour in no way implied that they shared the views of the representatives of Pakistan and Italy.
35. Mr. GARRIGUES (Spain) regretted that article 5 [became CISG article 6 ]had been couched in such broad terms; in positive law, the provisions of the contract were obviously left to the discretion of the parties, but a contract of sale should not be capable of being altered into a contract for the exchange or performance of services.
Title of chapter II
36. The title of chapter II was adopted by 44 votes to none.
37. Mr. PLANTARD (France) asked for the two paragraphs in article 6 [became CISG article 7 ] to be voted on separately.
38. Mr. BONELL (Italy) was against the French motion for division, as he considered the two paragraphs of article 6 [became CISG article 7 ] to be closely linked with one another in substance.
39. Mr. HJERNER (Sweden) supported the representative of Italy.
40. The PRESIDENT called on the Conference, under rule 38 of the rules of procedure, to vote on the motion for division as the representative of Italy had opposed it.
41. The motion for division was rejected by 27 votes to 2, with 11 abstentions.
42. Article 6 [became CISG article 7 ] was adopted by 45 votes to none.
43. Mr. KRISPIS (Greece) said that in his opinion the first two sentences of paragraph 1 were unnecessary and of no practical use; a better place for them would be in the preamble. His delegation had none the less voted in favour because it approved of article 6 [became CISG article 7 ] as a whole and considered the provision in paragraph 1 on good faith in international trade to be essential.
44. Mr. BONELL (Italy) thought that article 6 [became CISG article 7 ] was particularly important for the Convention as a whole as it stated that uniform interpretation of the Convention was to be sought by all those called on to apply it, whether parties, arbitrators or courts of law. He hoped that paragraph 1 and above all the first portion of paragraph 2 would help such an interpretation in practice.
45. Article 7 [became CISG article 8 ] was adopted by 41 votes to none, with 5 abstentions.
46. Mr. HJERNER (Sweden), introducing his delegation's amendment to article 8 [became CISG article 9 ] (A/CONF.97/L.8), said that by inserting the words "or a general understanding" in article 8(2) [became CISG article 9(2) ], after "a usage", it would be possible to extend the article to cover trade terms generally used with a single specific meaning. The interpretation of trade terms commonly encountered in international commerce on usages such as "FOB", "CIF" and "waybills", would thus follow the rules set out in paragraph 2. He was not sure whether the French translation, "ou toute interprétation généralement admise" corresponded very well to the English wording "or a general understanding".
47. Mr. BONELL (Italy) strongly supported the Swedish amendment. In the First Committee his delegation had argued for the insertion of a new paragraph in article 8 [became CISG article 9 ] to deal with trade terms. He shared the Swedish representative's reservations about the French translation of his proposed wording.
48. Mr. MONACO (International Institute for the Unification of Private Law) (UNIDROIT) said that while it would be useful for the Convention to contain a provision on the interpretation of certain trade terms, he doubted whether the wording proposed by the Swedish representative would be satisfactory for the purpose, as it was too vague.
49. Mr. POPESCU (Romania) was against the Swedish amendment, which seemed to him dangerous, since it did not refer explicitly to trade terms in general usage.
50. Mr. SAM (Ghana) was also against the amendment, which he felt was liable to cause confusion.
51. Mr. SHAFIK (Egypt) said that he too had submitted an amendment in the First Committee on the interpretation of trade terms such as the INCOTERMS. Although the Swedish amendment went a long way to deal with the problem, its wording was not wholly satisfactory. He proposed that the Conference should decide on the principle of inserting a provision in article 8 [became CISG article 9 ] on the interpretation of trade terms and then, if the principle was accepted, that a working group should be set up to draft the provision.
52. Mr. KRISPIS (Greece) agreed with the views expressed by the representative of UNIDROIT. If the Swedish amendment were adopted, there were grounds for fearing that because of its vagueness the interpretation put upon it would go much further than the Swedish representative himself desired. For that reason he was against the amendment.
53. Mr. GARRIGUES (Spain) saw no reason to upset the present structure of article 8 [became CISG article 9 ], which was totally logical, by adding to it a provision that would be a source of confusion.
54. Mr. KUCHIBHOTLA (India) was not against the principle underlying the Swedish amendment, but wanted a working group to be set up to draft an acceptable wording as had been proposed by the representative of Egypt.
55. Mr. LANDO (International Chamber of Commerce) said that the International Chamber of Commerce regarded it as very important that trade terms such as the INCOTERMS should be interpreted in a uniform way. He therefore supported the Swedish proposal in principle, but thought that it would be best to give a working group the task of finding the exact wording of the provision.
56. Mr. HJERNER (Sweden) withdrew his amendment in favour of the proposal by Egypt.
57. Mr. BLAGOJEVIC (Yugoslavia) considered that the problem posed by trade terms was not one of interpretation but one of application. Usages, which were in fact an exception, should be interpreted restrictively. His delegation was therefore against the Swedish amendment.
58. Mr. MANTILLA-MOLINA (Mexico) said that the Conference should decide on the principle of a reference to trade terms in article 8 [became CISG article 9 ].
59. The CHAIRMAN invited the Conference to vote on the principle of inserting a provision in article 8 [became CISG article 9 ] on the interpretation of trade terms.
60. The principle was rejected by 22 votes to 12, with 11 abstentions.
61. Mr. KOPAC (Czechoslovakia) said that during the discussion on article 8 [became CISG article 9 ] in the First Committee it had been decided to insert a reference to formation of the contract in paragraph 2. He was afraid it would cause difficulties when a State was not in a position to accept part II of the Convention, on formation of the contract, because it could be considered that the usages referred to in article 8 [became CISG article 9 ] none the less applied to formation of the contract. He therefore proposed that the reference to formation of the contract in article 8 [became CISG article 9 ] should be deleted.
62. The CHAIRMAN noted that a State acceding only to part III of the Convention would in no way be bound by those provisions of the Convention relating to formation of the contract. He proposed that the problem raised by the representative of Czechoslovakia should be noted in the report of the Conference.
63. The CHAIRMAN put article 8 [became CISG article 9 ] to the vote.
64. Article 8 [became CISG article 9 ] was adopted by 42 votes to none, with 4 abstentions.
The meeting was suspended at 11.45 a.m. and resumed at 12.05 p.m.
65. The CHAIRMAN invited members to consider the amendment proposed jointly by the Argentine and Belgian delegations (A/CONF.97/L.3). There was an omission in the English version: the word "permanent" should be added at the end of the first line.
66. Mr. DABIN (Belgium) explained that the purpose of the joint amendment by Argentina and Belgium was to define the term "place of business". It was an idea used very frequently in contracts for the international sale of goods and the new article 73 bis [became CISG article 78 ] of the Convention made explicit reference to it. In business practice there was no general definition of the phrase "place of business", but only individual definitions in such places as conventions on matters of taxation and exchange or on the effects of bankruptcy. The two delegations had therefore tried to draft a definition of the term for the Convention under consideration.
67. The proposed definition introduced a double criterion. On the one hand, a place of business had to be an active and permanent business organization established in a given State. On the other hand, in addition to the physical element, there would have to be external evidence of its having the power to negotiate or undertake buying or selling operations. By requiring the place of business to be a permanent organization, it ruled out an agent merely having powers of representation, or a production unit whose management did not have the power to negotiate contracts on the party's behalf. Similarly, under the definition, a sole agent could not be considered as a place of business of a party, because he was an independent middleman, buying or selling on his own behalf and in his own name and not on behalf of a party. Subsidiaries with separate corporate states were also excluded from the definition.
68. He was aware of the shortcomings of the definition but believed that it was nevertheless likely to make the Convention easier to apply.
69. Mr. POPESCU (Romania) agreed that it was necessary to define the term "place of business" but considered that the text proposed by the Argentine and Belgian delegations did not deal with the problem of undertakings, such as the transnational corporations, having a great many places of business. He suggested that a working group should be set up to draft a more comprehensive and flexible definition and thought the Conference might take a decision on the principle of including such a definition in article 9 [became CISG article 10 ].
70. Mr. HJERNER (Sweden) warmly supported the joint amendment by Argentina and Belgium, which in his view provided a sufficiently precise definition. With regard to the problem of transnational corporations, to which the Romanian representative had referred, he pointed out that the proposed definition did not seek to determine the place of business that was to be regarded as such for the purposes of the Convention where a party had more than one place of business. The Convention was not in fact required to decide that question.
71. Mr. LOEWE (Austria) drew attention to a discrepancy between the French and English texts of the proposal. The French text used the words "l'établissement est au lieu où . . ." whereas the corresponding English text read "a place of business is a place where . . .". He would find it hard to accept the wording in the French text.
72. Mr. ROGNLIEN (Norway) said that most delegations could agree in recognizing that in principle it would be desirable to define the term "place of business" in order to ensure uniformity in the Convention on that point. The question of including such a definition in the Convention had been discussed on several occasions in UNCITRAL but it had not been able to agree on a concrete text.
73. The definition proposed by the delegations of Argentina and Belgium was acceptable to him. He believed that the definition of the term "place of business" should not be unduly restrictive. He wondered whether the word "permanent" did not lay down too stringent a requirement, the more so as the word "maintain" at the end of the first line in itself implied a degree of permanence. He was particularly pleased to see that the definition was based on the power to negotiate "or" conclude contracts. It would be going too far to insist that the place of business should be empowered both to negotiate and conclude formal contracts. That would exclude many trade branches of transnational corporations from the definition and thus have the effect of bringing local sales negotiated by such branches under the Convention. The places of business of such corporations in certain States were frequently empowered only to negotiate contracts, the contracts being subject to formal confirmation by the central management. If the content and terms of such contracts were in fact completed and for practical purposes more or less finalized by a sales branch in a State where they were negotiated, they should rather be regarded as domestic sales, unless the parties had agreed to apply the Convention.
74. Mr. MASKOW (German Democratic Republic) thought there was no point in defining the term "place of business" in the Convention. Article 9 [became CISG article 10 ] already gave some indication of the meaning to be attached to the term which might be used by courts in interpreting the provision. The proposal under consideration showed that it would be very difficult to arrive at a satisfactory definition.
75. Unlike the Norwegian representative, he believed that a definition, if one was necessary, would have to be somewhat restrictive. An unduly general definition would have the effect of limiting the application of the Convention, particularly if it also covered places of business with only the power to negotiate. In such cases, when preliminary negotiations took place in one country and the contract was concluded in another, it would be necessary to determine which was the place of business. A definition of that kind would merely complicate the present situation, in which it was generally easy in practice to determine the place to be considered the place of business.
76. He could not support the joint proposal.
77. Mr. BLAGOJEVIC (Yugoslavia) did not see why the term "place of business" should be defined in the Convention. Except in article 11 bis [became CISG article 13 ], the Convention contained no definitions, even of terms that were more frequently used than the term "place of business".
78. It should be remembered that the problem of transnational corporations and particularly of their places of business was one of the most hotly debated questions of the day. It would be unwise to settle the problem restrictively, for example by excluding a company's factories which regularly concluded contracts although they were not formally empowered to do so.
79. He therefore opposed the joint proposal.
80. Mr. INAAMULLAH (Pakistan) was in favour of the proposal. It was important that the Convention should include a precise definition of the term "place of business".
81. He reminded members that the definition of the word "party" had been discussed in the First Committee in connection not only with transnational corporations but also with State trading bodies, which were becoming increasingly numerous in developing countries. It had been his impression at the time that the Committee understood the term "party" also to apply to State undertakings.
82. If the Conference decided to appoint a working group to consider the definition of the term "place of business" more thoroughly, it might be useful to ask it also to consider the definition of the term "party".
83. Mr. SHAFIK (Egypt) considered that the absence of definitions was one of the great shortcomings of the Convention, especially in the case of the term "place of business", on which the application of the Convention depended. In his view the joint proposal was highly satisfactory and contained elements that could provide the starting point for a working group appointed to draft an acceptable text. He suggested that a vote should be taken on the principle of including a definition of the term "place of business" in the Convention. If the principle was adopted a working group should be set up.
84. Mr. NICHOLAS (United Kingdom) said that the discussion merely brought out the difficulties involved in defining the term "place of business". He was not opposed in principle to working out a definition, although he had doubts about the possibility of doing so at such a late stage in the Conference's deliberations. The wisest course would, as several delegations had suggested, be to set up a working group. In any event his delegation could not support the joint proposal in its present form.
85. Mr. HONNOLD (United States of America) thought that the proposal under discussion was much clearer than the corresponding ULIS provision and should be helpful in defining the field of application of the Convention. It might be asked, for instance, whether a hotel where negotiations took place would be considered a place of business. If so, the Convention would not apply, as the transaction would not be considered an international sale within the meaning of article 1(1) [became CISG article 1(1) ]. Situations of that kind, which were not uncommon, might result in disputes. He was in favour of voting on the principle of including a definition and of setting up a working group.
86. Mr. MICHIDA (Japan) said he appreciated the efforts of the Argentine and Belgian delegations but would be unable to support their proposal, which would simply have the effect of limiting the field of application of the Convention. If the proposal was adopted it would always be necessary to decide whether a place of business was or was not empowered to conclude a contract before determining whether the Convention applied. That would be an undesirable state of affairs. In any case difficulties might arise since many contracts were concluded by telex or telegram, outside any place of business. Such a proposal might have its place in other instruments such as double taxation agreements but the situation was different in the case of the Convention under discussion.
87. The PRESIDENT invited the Conference to vote on the proposal to define "place of business" in the Convention. He would then put to the vote the proposal by the representative of Pakistan that the working group, if one was set up, should draft a definition of the term "party".
88. The proposal to include a definition of the "place of business" in the Convention was rejected by 23 votes to 17, with 5 abstentions.
89. Mr. INAAMULLAH (Pakistan) said that in view of the result of the vote he would withdraw his proposal.
90. Article 9 [became CISG article 10 ] was adopted by 42 votes to none, with 2 abstentions.
92. Article 11 [became CISG article 12 ] was adopted by 45 votes to none.
Title of part II
94. The title of part II was adopted by 43 votes to none.
95. Article 12 [became CISG article 14 ] was adopted by 41 votes to none, with 5abstentions.
96. Mr. FOKKEMA (Netherlands) explained that hehad abstained on article 12 [became CISG article 14 ] for the reasons he had statedearlier in the First Committee.
97. Article 13 [became CISG article 15 ] was adopted by 46 votes to none.
98. Article 14 [became CISG article 16 ] was adopted by 44 votes to none, with 2abstentions.
99. Article 15 [became CISG article 17 ] was adopted by 45 votes to none.